I would close the credit card account before I would let another cc company take advantage of me again. I have only 2 now, both have low balances. My goal is to pay off both, cancel one and never use the one I keep open. It's not right, but a cc is necessary to book a flight or reserve hotels, but that doesn't mean I have to pay them with a credit card. I am sick of being ripped off. These CC companies are shooting themselves in the foot by treating their customers poorly and people today do not tolerate being abused by businesses more than once. They think they are above us, but they are wrong. Without us, they expire. Before there were banks, the church "encouraged" fair interest rates between neighbors. It's time to get back to basics and stop living beyond our means.

Let's all cancel all but one credit card and let the credit reporting companies figure out how to sort that out.

To all those who've had their rates raised and limits slashed but can't pay them in full - you might want to consider a debt management plan.

Since bankruptcy wasn't an option I talked to a debt management counselor. The interest rates moneymanagement negotiated on my accounts range 0% to 10% - granted my FICO will bite the big one but the creditors won't control my life any longer either.

The thought I would keep paying their ridiculous interest rates to protect my precious FICO score - WRONG!

Since all my accounts were always paid on time and more than the minimum that helped make setting up my DMP easier.

Now I'll be debt free in 54 months or sooner if I continue paying the extra money I had in the past.

Among others, Home Depot's rate went from 26.99 to 9.9, Chase went from 28.99 to 6.0 and Target from 22.9 to zero!!

What I'd like to know why they continually refuse to negotiate with their customers to help them avoid trashing their credit score but they will if you enroll in a DMP.

People do get carried away about this credit score thing (Fico score). I have seen a lot of people refuse opportunities to save money today because that might mess thier credit for future transactions lol...if thats ever going to happen. The credit score is the same scam that the banks use to attach reward points to your credit card, so people end up using the credit card not because they need to but because they want the rewards. I personally dont care about credit scores and i go to stores and apply for credit cards all the time to save 20 or 25%, most of the time they refuse it but i still get the discount on that day lol and if i get approve, i just cancel them afterwards...so grow up people..live is more than just improving your credit scores. Improve your health lol

Maybe Fair Isaac should change the scoring to better reflect the users ability to pay (ie. income vs. total available credit), rather than the ability of the user to rack up and debt and juggle debt among credit cards. Over-extension of debt (also called "margin") has lead to financial problems many times over history.

I see it mentioned many times here to just pay off the cards and shred them or put them away, safe deposit box or whatever... I paid off two of my BofA cards and still had a 3rd, they closed the two paid off cards, then I paid off the 3rd which had a credit line of $5,700 and just this last week they closed that account for non-use or zero balance. This had definitely harmed my credit FICO credit score! I don't see what I can do about it other than close my savings and checking accounts there and stop doing business with BofA. Perhaps once enough people stop doing business with certain instituitions they will remember who their customers really are.

The three reporting agencies must comply with the Fair Credit Reporting Act. If you have a disagreement with what is on your credit reports you may file a letter with the reporting agency stating your reasons for disputing the information on the report. If you are really interested in getting rid of credit card debt there is an excellent resource you can use. His name is Dave Ramsey and he has a great program for living debt free. It is such a good feeling to have no debt - and anyone who is serious about achieving this goal can do it. Ramsey has a web site with all kinds of information as well as books (very reasonably priced) and seminars to help one meet the goal of living debt free. Wishing you the best if you take that road!

The main thing to remember is that these companies are *businesses*. This means that they'll try to get as much money from people as they can, before the government creates new laws to reduce the fees.

In the meantime, DEFINITELY DO close your credit card. Tell the bank that the higher interest rate is unacceptable and that they'll be getting NO MORE MONEY from you. They may still have millions of customers, so it's up to you to convince them that you're a "good customer", as in: you never pay off the balance, you happily pay the "unpaid balance" fee, you happily pay the interest rate, and so on.
When the bank realizes they'll be losing money when you close your account, they should be more than willing to work with you.

The big question is: who has more to lose- the customer by closing his account or the bank by losing money when customers close their accounts?

I have a very simple solution for the credit problem. Do not spend more than you can pay. What a novel idea.

Let me get this straight. 'Sound' financial advice is to hold on to zero balance but active credit cards. What happens when one of the multitude of identity thieves gets their hands on it? Then it is up to YOU to straighten it. Or better yet, leave the card open and keep paying the higher interest rate to avoid a 20 point hit to your credit rating. Give me a break.

I actually love credit cards. Went to Disney in August for free on points and have not paid a penny in interest in 10 years. To repeat an often mentioned credo on this site. LIVE WITHIN YOUR MEANS!

It's legal loan sharking. Wait a minute, you might get a better rate and better service with a loan shark. "Larry the Leg-Breaker" or Big bank "credit-Breaker" Nice choice, huh?

I have made my decision, and the CC companies do not like it! I will not pay them any more money for CC balances because they have broken their contracts with me. They have raised rates, reneged on introductory offers (especially Chase CC), and now think they can shame me back into compliance? Not so. I am no longer concerned about a FICO score, and I don't need their credit. They can sue me, but I may just declare bankruptcy, first. I am not a slave, and I will not spend my precious time working for those legalized loan sharks. Perhaps this is the revolution that our country needs. No more payments from me!

Dream on if you think that a poor credit score CANNOT automatically eliminate a person from becoming employed. A friend of mine, a very experienced and educated professional was bluntly told by a prospective employer that he would have been hired if it had not been for his poor credit. His response was that he needed a job in order to pay his debts!!! News Flash!!!! If a person has been unemployed for a long period of time, say 2.5 years, without any source of income and having exhausted all savings and 401K retirement funds, it is pretty likely that they may have a poor credit score. He is seeking employment day and night on the internet, etc. and as time passes by, he sinks deeper into dispair and disbelief that he may never be able to become employed again because he is unable to pay his bills while UNEMPLOYED! I imagine that some of you out there will say that perhaps my friend is irresponsible for being in debt or that he should have been more prepared for the possibility of being uemployed. To your surprise, my unemployed friend says the same thing. He never imagined that he would be in this position and is extremely embarassed by his situation. Given the state of our economy and the high unemployment rate, I certainly hope that the Obama Administration pursues changing the practice of credit reports being reviewed for employment purposes. Just because a person has financial problems, does not make them unfit to hire!!

It is ironic that politicians in their quest for endless power have to sell their souls and become OWNED by ceo's and are their slaves and actually rendered powerless.

Congress is pretending to be outraged over this!!! Which makes it all that much more DISGUSTING! They DELIBERATELY put a delay so the banks could get another bail out from Obama and Congress. They all think the voters are so stupid that we would not see their sneaky plan. Now that all the terms are changed they want to speed it up. WE ARE NOT THAT STUPID!!!! Unfortunately they own us and we can not do anything about it other than vote against them and put a new set of criminals in charge. Besides being corrupt they are not very smart since the unwarrented extra money being given to the banks every month is less money to stimulate the economy and small businesses. My $200 a month is now $500 a month so I won't be buying a thing and probably cancelling some services too. More job losses from this latest bail out to the banks. This is corupt and unethical but when the politicians are owned by theives and criminals they can get away with it. Everyone I know will be voting against every member of Congress and despite voting for Obama last time they all want him out ASAP! The money the banks gave him for his campaign is a waste since no one has any respect for him anymore and he definitiely is not for the middle class which was why he won. I wish he would get impeached. He boasted that he did not take large amounts when running but he took a bundle from Goldman Sachs AFTER he was elected. I like Gary's idea and think we should all go on strike since the politicians are not doing a thing to help those that voted for them. The only solution I see is if everyone would refuse to pay their credit cards until the terms are put back to what they were when the money was borrowed. Cash is king, Scores are deliberately lowered for every little thing to allow banks to raise interest rates. But who would want to borrow anything anymore anyway from these legalized loan sharks? I will go hungry before I ever charge a thing. I never realized that I was borrowing from legalized criminals. I don't see how the economy will get going if no one will be buying goods and services. More jobs lost and more credit card defaults and Congress and Obama willl make the taxpayers bail out theses companies again when we can't meet their 30% interest rates!! Only the criminals do not have to abide by the contracts. I feel like I am dreaming a night mare. This is soooo unjust I can not see how it is allowed to continue. The devil is in charge. What a pitiful Country we have become under the rule of greed!!

I would like to know when it became legal to just change a contract as you go. When you sign up for a credit card you agree to the terms of the card. If we went to the grocery store and they had an item listed at $5 but when I went to check it out it costed $10. How is that fair?

Here is a thought - don't put things on credit that you can't afford to pay for. The only reason banks get away with this stuff is because consumers have spent money they don't have, and seem to forget that these credit cards are loans that have to be paid back. Just because you can't remember what you bought for that $10,000 balance (or whatever it is), doesn't mean you don't owe it. No, the interest rates should not be increased willy-nilly, and bogus fees imposed. But if Americans would just be more responsible, then rate increases and such would have no impact.

Some of us are unable to pay their accounts in full each month (medical emergencies, etc.). At least I am working to pay them off without any help from anyone.

The right way is to opt out of their business. Close all accounts with firms that try to rip you off. Screw FICO. It just doesn't matter unless you're seeking credit.

Pay cash for what you need, including your next car. File for bankruptcy if that's what it takes to get there.

I learned this the hard way.

I will never do business with Bank of America, Citicorp, or Chase (and their subsidiaries) again, unless they change their ways AND refund what they've already stolen.

Got the same threats from Chase - and was told that I could close my card and they would lower my "new" rate to 17.99%. I replied that closing the card would damage my credit score and the representative told me that "that was impossible - closing the card could only help my score." It's a pity that I didn't have a recording device on the line at the time - I could have filed fraud charges against the bank.

Simple solution is to cancel all the credit cards you have. Rather than use credit why not save up the cash and pay for it? Who cares about the miniscule impact this has on your credit score. I've not had a credit card for close to 15 years now and a most recent credit check puts my FICO score at over 900. Don't believe the hype that you have to have a credit card to establish good credit history.

i got the same letter last week. the next day i was reading new york times website and saw a "your money" article from august (which i'd read and forgotten about). it advised that at penfed.com you can get a card for a very low rate and lengthy introductory period if you join a military families group for $20 (that anyone can join regardless of military relatives). i checked the next day and the rate had recently increased from 2.99% to 4.99% and the terms were intro rate for 24 months, but that's still awesome.

i'm doing it in the next few weeks. transfer fee is 2.5% up to $100. citibank can charge me 29.99% of $0.

WHO CARES about FICO scores and the blood sucking credit card issuers???

FICO scores are determined in a secretive manner.

It's time Americans stood up to all this manipulation and refused to buy "made in China" junk at Walmart on credit.

Stand up and tell auto dealers, banks offering mortgages, and future employers that your FICO score may suck, but that you DON'T !! Employers that check your score to decide whether to hire you aren't worth working for.... an auto dealer that offers you a high interest rate or nothing at all...walk out of the show room. See how fast the salesman and business manager head's spin. They'll be amazed that you "turned down their offer".

Americans have got to stand up. Laws need to be put in place to limit credit rates. Until then....credit issuers are doing no more than rap*** the consumers.

If possible, pay off any balances on the card, accept the higher rate and then never use the card again. This way the higher rate has no effect on you, and it will hurt Citibank if they collect zero fees and zero in processing charges. Plus you do not take a hit to your credit score.

Citi did the same to me. Then Chase lowered my credit limit, and just flat out cancelled another card (formerly WaMu, which they took over)- without giving me any options - a card with a $15,000 credit limit and NO balance on it! The actions of these credit card companies - all of which too MY tax money to bail them out - are unconscionable. I have NEVER been late, NEVER been over my credit limit, and while a few cards have high balances, I still have (or I still HAD) tens of thousands in available credit.
THEIR actions have lowered my credit score and hurt ME financially when I have completely honored my end of the deal. How are they not guilty of some sort of fraud/betrayal of trust crime? How are they not liable to the hundreds of thousands of people who THEY are ruining? I cannot believe there are no ramifications for their actions.

How about not only upping the interest rate but adding a yearly card fee like bank of America is planning on? I'm been responsible since 1987. No lates and they've made some money from my account and I ignored the offers of all those new cards over the years. What I feel towards the banks and Congress is unspeakable!

What kind of capitalism is it when customers are penalized thousands of dollars for changing merchants? If the balance is 0 and new credit lines replace the old available credit there should be not penalty. This system was designed by the credit card companies for the credit card companies. Now that they’re adding annual fees and lowering available credit they should be penalized for changing the terms just as we are penalized for shopping for better customer service. Congress isn’t done here yet, they need to bring back real competition, real capitalism, not this monopolistic corporate parasite model created during the deregulation craze of the last 30 years.

This is simply insane - 3 credit reporting companies holding the power of the purse over every American.

No checks or balances, almost no oversight, and no way to opt out.

People - wake up and smell the corpses - we're all being groomed as slaves.

Maybe an 'always best solution' is pay the credit card down to zero, put it in a safety deposit box or shred it and never use it again.

Perhaps the best advice, if possible--and a no-fee card is to just pay off the balance and leave the card open. This actually is the most expensive option for the bank, they have to pay the cost of holding the card open and get no revenue. If you really want to extract your pound (or ounce) of flesh from the bank you should turn off e-statements (making them pay the postage) and charge a few cents (a stick of gum or a candybar) every month so the card isn't inactive. Remember to pay it off every month! For added insult, call customer service and chat with the nice Indians or request a duplicate statement or card.

Jeez people, howzabout you just zero-balance the friggin things and put the cards in your save-deposit box. Stop paying people for sitting at their desks and thinking up more ways to drain your wallet.

THIS STUFF MAKES ME HATE MY COUNTRY.... WHY SHOULD RESPONSIBLE PEOPLE LIVNG WITHIN THEIR MEANS BE PUNISHED FOR NOT ALLOWING CC COMPANIES TO SCREW THEM?

MEANWHILE, THE ROBBER BARONS THAT SCREWED THIS COUNTRY OVER THE LAST DECADE CONSTALY GET REWARDED FOR THEIR FAILURES? NO OWNDER AMERICA IS FALLING APART... LOOK AT THE GREEDY DIMWITS RUNNING THE BANKING AND CREDIT INDSUTRY

We are at the point where we no longer use credit. Everything will be paid shortly and we will realize the benefit of extra cash from no longer making payments. So what if we drive our cars for a few more years? It is only with our generation that new cars are purchased every few years. I think a return to how money was managed by our grandparents may be a good lesson for everyone.

This has happened to me on all cards. One card that I had opened earlier this year hit me first, and they refused to help me, so I ended up closing that account, even though I had a perfect record with them. On the other hand, a card that I have had for 8 years was trying to raise my rate, so I called that company and they actually left my rate alone instead of increasing it, in order to keep me as a customer (this was a big 10 bank).

I really think it depends on how long you have been with the company, and your payment history. I have never missed a payment. Make sure to at least try to reason with the company, if your phone operator won't help, ask for someone higher up! :)

"Accept the higher rate, she was told, or close the card and accept the damage to her credit score."
Really, the credit card rep told her that closing her account would damage her credit score? That's what the rep really said?
What ticks me off about this story (and others) is that the reason the credit card companies are slashing limits and raising rates is because of what CONGRESS is doing to PROTECT irresponsible credit card holders! In protesting the worse offenders, you make the best customers suffer. I don't blame the banks because they have a bottom line they have to meet. I blame Congress in being so blind and near-sighted about the credit crisis in America.

Thanks Congress for the imposing new restrictions on the credit card industry to "help" consumers. Not surprising to anyone (other than members of Congress), credit card companies have sought to offset lost revenue from the restrictions by increasing credit card interest rates and other fees. When you hear "I'm from the government and here to help", generally it's a good idea to run the other way.

Credit card companies are full of weasels. That's really the only advice you need. Use your debit cards, pay down your credit cards, and CUT THEM UP/CLOSE YOUR ACCOUNTS.

very good article and advice. Hopefully, Congress can pass a financial reform protecting the consumer instead of a band of vultures that helped create most of the problems in the first place. Stay after your congressperson to represent your financial interest in the upcoming reform

I was in the same situation. You missed the obvious and best choice. Pay off the offending card and keep it open indefinitely with the balance of zero. I have 2 'zombie' cards that increase my credit to debt ratio (and thus my credit score) and cost me nothing. I use the other cards for purchases.

I've taken the alternate choice, paid off all of my debt and closed all of my open credit accounts. Within a year I expect to have a credit score of 0. Not having any credit is better than having bad credit, not to mention I don't care what these moronic banks do anymore.

Why would any NOT pay off their credit cards each month?

The whole concept of a score made in secret that's used to judge you will never be fair. What happens to your read when, instead, the bank out of the blur decides to cut their available credit and ruin your 'score' without you having to do anything?

Hate to say, but working to pay off your cards and not worry about interest rates will always be your best bet. Now what I'm going to do if my 'free' card starts imposing an annual fee is goign to be an interesting question...

If the sheep in this country had an ounce of courage and self-esteem, they'd cancel every single unnecessary monopoly product and tell these arrogant jerks we're tired of being manipulated while they fiddle with their investments and marketing while the economy burns. Are credit cards, cable TV, and cell phone plans really necessary? If everyone told these companies that as of January 1 we'd cancel our plans, the companies would have to change their ways or fold. And what would we lose?